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No Lump Sum Required at the End of Forbearance, as per FHFA

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In a recent article, the Federal Housing Finance Agency (FHFA) has confirmed that borrowers in forbearance with a Fannie Mae or Freddie Mac (the Enterprises)-backed mortgage are not required to repay the missed payments in one lump sum.

This indeed is valuable news for homeowners, and they should no longer be worried about losing their home during this national health emergency. To help homeowners navigate the forbearance process, FHFA partnered with CFPB on the Borrower Protection Program to provide homeowners accurate information about forbearance and address concerns noted in some consumer complaints.

In response to the COVID-19 national emergency, the Enterprises have permitted borrowers who are facing financial hardship due to the pandemic with a forbearance option. In this case, the borrower can pause or have a reduction in their monthly mortgage pay-out. The missed payments will have to be paid back by the borrower. For those borrowers who opt for forbearance, their mortgage servicer will contact them about 30-days before the end of the forbearance plan to see if the temporary hardship has been resolved and discuss a variety of repayment options. If the hardship has not been resolved, the forbearance plan can be extended. If the hardship has been resolved, the servicer will work with the borrower to:

  • Set up a repayment plan;
  • Modify the loan so the borrower’s payments are added to the end of the mortgage; or
  • Set up a modification that reduces the borrower’s monthly mortgage payment.

Some useful links below

Fannie Mae: Understand Your COVID-19 Mortgage Options
Freddie Mac: Lump Sum Repayment is Not Required in Forbearance

To learn more about the forbearance process you can read the script the Enterprises provided to mortgage servicers here.

At PrivoCorp, we can help servicers engage effectively with borrowers and efficiently handle forbearance requests. We can also coordinate with other related third-party agencies to mitigate the loss for servicers.

PrivoCorp has been serving the mortgage industry for 10+ years. We offer end-to-end mortgage servicing support right from Loan Boarding to managing default operations and loss mitigation.

Find out how this can make a difference to your servicing operations. Write to us at,we would love to help!

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